Bruce Starks, CPA, CFP® – Page 30

Anchoring Risk in Client Investing

Good to Know This blog is the first in a series to identify common psychological influences that can lead clients to financial decision errors. We begin this series with a common influence referred to as Anchoring. Anchoring Defined Anchoring is regarded by some as one of the most powerful psychological influences in the human brain.…

Phantom Stock

Course: Investment PlanningLesson 5: Fundamental Equity Analysis Student Question: Hello, What is the difference between Stock options and Restricted stock plan or phantom stock? Seems confusing. Mary Instructor Response: Hi Mary, Stock options are contracts between employer and an employee that allow the employe to purchase a specific number of employer shares at a specific price after…

Maximum Family Benefit

Course: Insurance PlanningLesson 10: Social Security Student Question: Does the maximum family benefit apply to a husband and wife that are both fully insured if the combined total between the two exceeds the maximum family limit? If I understand correctly, the maximum family limit only applies if there are beneficiaries within the family receiving benefits…

The “Secret” Social Security Payraise

Good to Know One of the beauties of Social Security Retirement benefits is the cost-of-living adjustment (COLA). The COLA is simply an increase to a covered worker’s benefit to maintain their purchasing power. A covered worker is a worker from whose compensation Social Security taxes have been withheld. The long-term average annual COLA is 2.2%,…

Understanding the Relationship Between Coupon Rates and Duration

Course: Investment PlanningLesson 9: Fixed Income Securities Student Question: There is a question regarding duration that I continue to struggle with. Which of the following are true:1-Lower coupon bonds are more sensitive to interest rates than high coupon bonds.2-There is inverse relationship between bond prices and change in interest rates.3-There is a positive relationship between coupon rates and…

UNHOLY TRILOGY: COVID, REMOTE WORK, and CYBERCRIME

CFP® Certificants in the News “There are only two kinds of financial planning firms: those that have faced a cyberattack and those that will.” Consulting Firm PwC Business is booming for cybercriminals. The confluence of COVID and remote working has more than doubled cyberattacks against financial firms. Moreover, the increased number of attacks is far…

Crummey Powers

Course: Insurance PlanningLesson 16: The Irrevocable Life Insurance Trust Student Question: Must Crummey powers always be in effect to apply the annual gift tax exclusion in order to transfer to an irrevocable trust? Or is it the case that as long as it was done once, will all transfers be eligible for the annual gift tax exclusion? Michael…

Calculating Late Filing/Paying Penalties

Course: Income Tax PlanningLesson 1: Introduction to Taxation Student Question: For this question, could you send me the math behind finding the answer? I want a better understanding of how the penalty was assessed. Thank Andrew Review Exercise: Jerry’s taxes were due April 15th. He filed his return in October of the same year, and…

Tax-Avoidance On Steroids—Private Placement Life Insurance

Good to Know CFP Board expects a certificant to serve a spectrum of client demographics based upon factors such as age, gender, culture, and net worth. This blog summarizes a unique income tax strategy for high and ultra-high net worth clients. Private Placement Life Insurance (PPLI) can help a client: Avoid income tax on investment…

Passing Property Via Will

Course: Investment PlanningLesson 14: Evaluation Portfolio Performance Student Question: Hello – I’m a little confused about the example (below) discussing an heirloom of only sentimental value. Why would this be titled at all for a will, especially since an earlier lecture said items of no value would pass through will as the situation does not…